The A2B Australia Ltd (ASX: A2B) share price jumped by over 5% yesterday following the release of a market update. A2B, formerly known as Cabcharge Australia Limited, is the market leader in the personal transport sector. The company manages fleets of taxis and premium taxi services, as well as payment processing, taxi bookings systems and EFTPOS consulting services.
What did A2B announce?
A2B updated the market on its performance during the COVID-19 pandemic. In particular, the company advised that, after an 80% decline in payment turnover during the early weeks of the pandemic, it had enjoyed 10 consecutive weeks of growth.
The cab operator also announced that changing customer behaviour during the pandemic, as well as an increased desire for contactless payment technologies, is fueling a period of rapid geographic expansion. During FY20, A2B subsidiary Mobile Technology International has installed its bookings and despatch technology for clients across Canada, the United States, Finland and Denmark.
Within Australia, another subsidiary company, 13Cabs, has also grown significantly during FY20. 13Cabs has initiated service arrangements for a number of local taxi networks across regional locations such as Taree, Dubbo and Townsville. In response to demand from local operators, 13Cabs has also launched proprietary networks in Perth, Albury/Wodonga, Toowoomba, Darwin and Wollongong.
Even with this expansion, the company’s active fleet numbers are still 23% lower than pre-pandemic levels but are recovering.
Financial position
I believe A2B’s robust balance sheet at the outset of the pandemic, as well as its early and decisive action, have positioned the company well for continued recovery. After payment of the H1 FY20 dividend, A2B has a total liquidity position of ~$74 million. This includes $24.2 million of free cash
Social distancing and COVID-19 control measures continue to impact economic activity. However, the company’s brand strength and technologies have enabled it to increase its footprint during the pandemic.
A2B share price
The A2B share price closed at $0.82 on Monday, valuing the company at $98.75 million. This gives it a price to earnings ratio of 10.04 and a trailing 12 month dividend yield of 9.76%.
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Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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